total quality management, commitment, and recovery...

Total Quality Management, Commitment, and

Recovery Performance in Commercial Banks of

TRNC

Setareh Shirkhani

Submitted to the

Institute of Graduate Studies and Research

in partial fulfillment of the requirement for the Degree of

Master of Science

in

Banking and Finance

Eastern Mediterranean University

July 2013

Gazimağusa, North Cyprus

Approval of the Institute of Graduate Studies and Research

______________________________

Prof. Dr. Elvan Yılmaz

Director

I certify that this thesis satisfies the requirements as a thesis for the degree of Master

of Science in Banking and Finance.

____________________________________

Assoc.Prof. Dr. Salih Katırcıoğlu

Chair, Department of Banking and Finance

We certify that we have read this thesis and that in our opinion it is fully adequate in

scope and quality as a thesis for the degree of Master of Science in Banking and

Finance.

________________________

Assoc.Prof. Dr. Salih Katırcıoğlu

Supervisor

Examining Committee

____________________________________________________________________

1. Assoc.Prof. Dr. Salih Katırcıoğlu ______________________________

2. Assoc. Prof. Dr. Bilge Öney ______________________________

3. Asst. Prof. Dr. Doğan Ünlücan ______________________________

iii

ABSTRACT

This thesis investigates the impact of perceived total quality management feature on

the service recovery performance of the banking industry in Northern Cyprus. The

moderating effect of job satisfaction and affective commitment have also been

considered in the study results from 150 employees working in the various banks

show that perception of them on the TQM factors exert positive and statistically

significant on not only job satisfaction and commitment but also on service recovery

performance. Finally factor analysis test results also do reveal that findings from this

questionaries’ survey are robust.

Keywords: TQM, Satisfaction, Commitment, Recovery Performance, Banks

iv

ÖZ

Bu tez çalışması, çalışanlar tarafından algılanmış Kuzey Kıbrıs Bankacılık

Sektörü’nde toplam kalite yönetimi uygulamaları ile çalışan memnuniyeti, çalışma

eğilimi, ve başarısızlık telafisi arasındaki ilişkiyi irdelemektedir. 150 banka çalışanı

ile yapılan anket analizleri sonucunda, bu değişkenler arasında pozitif yönde bir ilişki

olduğunu göstermektedir. Bankalarda uygulanan toplam kalite yönetimi, çalışanın

motivasyonunu, işe eğilimini, ve herhangi bir hizmet esnasında karşılaşılan

başarısızlığı telafi etmek konusundaki performansını olumlu yönde etkilemektedir.

Çalışmada varılan sonuçlar hem istatistiksel olarak anlamlı hem de önceki literatür

çalışmalarının sonuçları ile benzer çıkmıştır. Son olarak, faktör analizi sonuçları da

aynı zamanda, sonuçların geçerliliğini ortaya koymuştur.

Anahtar Kelimeler: TKY, Memnuniyet, Eğilim, Performans, Banka

v

To my parents who supported me in each step of my life

vi

ACKNOWLEDGMENTS

First of all, I would like to thank to all the kind people around me because it would

not be possible to finish this thesis without their help and support.

Above all, I would love to thank my dear parents, Farzaneh Bahramifar and Majid

Shirkhani and my beloved brother, Shahab Shirkhani, who always support me and

patronize me all the way.

Further , I would love to thank especially to my dear mother who gave me all her life

and experience in all steps of my life without any expectation. I know that I can

never respond to any of her kind efforts.

I would like to express my gratitude to my supervisor, Prof. Dr. Salih Katircioğlu,

whose expertise, understanding, and patience, added considerably to my graduate

experience. Undoubtedly I would not be able to accomplish this job without the help

and guidance of my supervisor who supported and encouraged me with no hesitation

all the time. I express my sincere gratitude to his friendly responsiveness.

Foremost, I would like to thank to anyone who assisted me in this job and also my

deep appreciation to my honorable jury members Prof. Dr. Salih Katircioğlu, Assoc.

Prof. Dr. Bilge Öney and Asst. Prof. Dr. Doğan Unlucan for dedicating their time

and undertaking the judgment of my thesis.

vii

Also I would like to express my thanks to my best friend Amir Hossein Habibi

because of his always support and kindness not just in this way but in all my life.

Finally my thanks must go to my close friends, Dr. Nima Mirzaei and Nima

Tazehzadeh who shared their knowledge with me and assisted me greatly. And last,

but not means least, I would like to thank my precious friends for their support and

advice throughout my research.

viii

TABLE OF CONTENTS

ABSTRACT ................................................................................................................ iii

ÖZ ............................................................................................................................... iv

ACKNOWLEDGMENTS .......................................................................................... vi

LIST OF TABLES ...................................................................................................... xi

LIST OF FIGURES ................................................................................................... xii

1 INTRODUCTION .................................................................................................... 1

1.1 Aim and Contribution of the Study .................................................................... 3

1.2 Research Methodology....................................................................................... 4

1.3 Organization of the Thesis ................................................................................. 5

2 HISTORY ................................................................................................................. 6

2.1 North Cyprus History ......................................................................................... 6

2.2 TRNC Economy ................................................................................................. 8

2.3 Northern Cyprus Banks ...................................................................................... 9

3 LITERATURE REVIEW........................................................................................ 11

3.1 Introduction ...................................................................................................... 11

3.2 TQM ................................................................................................................. 11

3.2.1 Top Management Leadership .................................................................... 14

3.2.2 Teamwork ................................................................................................. 15

3.2.3 Empowerment ........................................................................................... 16

3.2.4 Reward ...................................................................................................... 18

3.2.5 Training ..................................................................................................... 18

3.3 Job Satisfaction ................................................................................................ 20

ix

3.4 Affective Commitment..................................................................................... 22

3.5 Service Recovery Performance ........................................................................ 23

4 RESEARCH MODEL AND HYPOTHESIS.......................................................... 25

4.1 Introduction ...................................................................................................... 25

4.2 Conceptual Model ............................................................................................ 25

4.3 Hypothesis ........................................................................................................ 27

5 DATA AND RESEARCH METHODOLOGY ...................................................... 31

5.1 Sample and Study Setting ................................................................................ 31

5.2 Questionnaire Measures and Structure............................................................. 32

5.3 Reliability and Factor Analyses ....................................................................... 33

5.4 Hypothesis Testing and Correlation Analysis .................................................. 35

6 EMPIRICAL RESULTS ......................................................................................... 37

6.1 Descriptive Statistical Analysis........................................................................ 37

6.2 Frequencies ...................................................................................................... 37

6.3 Correlation Analysis ........................................................................................ 40

6.3.1 Correlation Analysis: TQM, Job Satisfaction, Affective

Commitment and Service Recovery Performance ............................................. 40

6.3.2 Correlation Analysis: TQM Indicators ..................................................... 42

6.3.2.1 Leadership and TQM Indicators ........................................................ 42

6.3.2.2 Empowerment and TQM Indicators................................................... 43

6.3.2.3 Reward and TQM Indicators .............................................................. 43

6.3.2.4 Teamwork and TQM Indicators ......................................................... 44

6.3.2.5 Training and TQM Indicators ............................................................ 45

6.3.3 Correlation Analysis: TQM indicators, TQM and Service

Recovery ............................................................................................................ 46

x

6.3.3.1 TQM Indicators and TQM ................................................................. 46

6.3.3.2 TQM Indicators and Service Recovery .............................................. 47

7 CONCLUSIONS AND POLICY IMPLICATIONS .............................................. 49

7.1 Conclusions ...................................................................................................... 49

7.2 Policy Implications .......................................................................................... 51

REFERENCES ........................................................................................................... 53

APPENDIX ................................................................................................................ 61

A: Questionnaire ................................................................................................ 62

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LIST OF TABLES

Table 5.1: Reliability and Factor Analyses ................................................................ 34

Table 5.1: Reliability and Factor Analyses (Continued) ............................................ 35

Table 6.1: Frequency Table........................................................................................ 38

Table 6.2: Descriptive Statistics of Completed Questionnaires ................................. 39

Table 6.3: TQM, Job Satisfaction, Affective Commitment and Service Recovery

Correlations ................................................................................................................ 41

Table 6.4: Leadership and TQM Indicators Correlations .......................................... 42

Table 6.5: Empowerment and TQM Indicators Correlations ..................................... 43

Table 6.6: Reward and TQM Indicators Correlations ................................................ 44

Table 6.7: Teamwork and TQM Indicators Correlations ........................................... 45

Table 6.8: Training and TQM Indicators Correlations .............................................. 46

Table 6.9: TQM Indicators and TQM Correlations ................................................... 47

Table 6.10: TQM Indicators and Service Recovery................................................... 48

xii

LIST OF FIGURES

Figure 4.1: Conceptual Model of Research ............................................................... 26

1

Chapter 1

1 INTRODUCTION

Nowadays, organizations are operating in a different environment. The banking

sector has been experiencing new challenges which are accompanied by the process

of privatization and globalization of international economies. The banking sector is

performing in volatile markets which there are lots of pressures. Banks must

establish new ways to serve customers in a better condition in order to remain

competent. Moreover, high competition, credit risks, the new demands of customers

and globalizations are also forcing the banking sector to reform.

As business environment never stops changing, new models of management should

be established continuity to deal with the new environment. Top managers in

banking sectors should be more aware of their customers’ demands and expectations

otherwise they would lose the market in comparison with their competitors.

Therefore, newly emerged business environment necessitates strong leadership,

commitment to improving quality, employees’ affective commitment. If a bank can

achieve all these factors, it will be different from other banks or non-bank

competitors.

The marketplace has become a place where any organization needs to be strategically

prepared to compete sustainable. Strategic management improves the process of

sustainability in an organization and in this way total quality adjustments brings a

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continuous improvement framework to an organization. So, total quality approach

helps to improve skillfulness, cut costs and provide some opportunities to evolve as a

leader in the market (Goetsch & Davis, 2010). Apparently, it is more difficult to

measure the quality of a service than of a manufactured good. In other words, service

industries such as commercial banks have more difficulties to define quality than

manufacturing industries such as automobile factories. Users usually have a limited

number of characteristics as a basis for comparison among available alternatives in

service industries. For instance, when one bank service lacks, customers preferably

move to another.

In recent decades, total quality management (TQM) has been evolving as a popular

modern strategic approach in many organizations and industries. TQM has existed

for a long time in modern management literature and has had a significant influence

on business history. As empirical studies reveal, many organizations have adjusted

this approach and have successfully achieved their goals (Easton and Jarell, 1998).

The implementation of corporate and functional strategies depends on the

companies’ resources and, particularly, on people. The human resource strategy

focuses on how the company should manage its staff to assist the organization in the

achievement of corporate objectives (Walker, 1992).

The private sector has been always trying to implement total quality management in

order to improve service quality, productivity and competitiveness (Hunt, 1992).

There are several successful cases in the private sector which have implemented

3

TQM approach. However, TQM has got more attention in 1990’s and public sector

organizations have also started to employ this strategy (Carr and Littman, 1991).

By the beginning of this period, academic researchers suggested that public

organizations could also improve their productivity by applying TQM practices

(Milakovich, 1990). Since that time, TQM has still been a vital part of modern

management strategies in government organizations (Van Seaton, 2010).

Last but not least, service recovery performance is an important topic which is

discussed in several studies. Business success is significantly dependent on the

service recovery performance effects. Therefore, to be successful in business and to

reduce costs, an organization should keep frontline employees satisfied and

committed (Ashill et al., 2008).

1.1 Aim and Contribution of the Study

The aim of this study is to determine the role of TQM for evaluating the impact of

job satisfaction and employees’ commitment on service recovery performance in

commercial banks of Northern Cyprus. In addition, this study is searching for the

relationship of job satisfaction and employees’ commitment with service recovery

performance. The indicators of TQM which are considered in this thesis are top

management leadership, teamwork, empowerment, reward and training. Data are

collected from a sample of Frontline employees of commercial banks in Northern

Cyprus. Finally, we targeted the following objectives to achieve the aim of the study:

4

1. Getting through the related literature about Total Quality Management factors

and their impacts on employees’ job satisfaction and commitment. Moreover,

service recovery performance is also considered to be affected by these two

factors.

2. Preparing questionnaires accordingly to acquire needed information. The

questionnaires were distributed to the banking sector employees of

commercial banks in Northern Cyprus.

3. Then, putting all collected data in IBM Statistics software which includes

SPSS and AMOS programs to analyze the findings of the study consequently.

4. Finally, comparing the findings with what is available in the literature and

suggesting some implications for the banking sector managers.

Therefore, it was expected that by implementing these objectives there would be

valuable results both quantitatively and qualitatively. We hope that this study

outcome can help top management in Northern Cyprus to improve their strategies

regarding TQM.

1.2 Research Methodology

This study is basically an empirical research which uses a deductive approach for

model development and testing. Our sample consists of commercial bank employees

of Northern Cyprus. Since we chose a quantitative approach, we designed a

questionnaire with the help of related literature. The collected data were entered in

IBM Statistics to compute needed information. Conclusions are based on the

acquired information from this level.

5

1.3 Organization of the Thesis

The structure of this study includes seven chapters. The first chapter introduces the

importance of the topic and the objectives employed to achieve the results. The

second chapter presents some information about Northern Cyprus banking sector and

some historical background. The third one summarizes the related literature and

discusses all the factors employed in the thesis. The fourth and fifth chapters

introduce the research model followed by hypothesis and then come to the research

methodology. The sixth chapter presents the collected data and the analysis of those

data. Finally, in the seventh chapter we come to conclusions and compare them with

the previous literature. In addition, limitations of the study and implications for

future researches are suggested.

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Chapter 2

2 HISTORY

2.1 North Cyprus History

Historically, Cyprus has experienced a variety of events. In 8500 B.C., first travelers

moved into this island. As being of the third largest island of the Mediterranean

region, many groups of people have been trying to get the control of it. In addition, it

is not only rich in natural resources of copper and timber, but it is also known

strategically a trading center because of its location. Therefore, many ancient nations

have been engaged in fighting to capture this island including Greeks, Ottomans,

Persians, Egyptians and Phoenicians. Cyprus was included in the domain which was

ruled by Roman Empire in 58 B.C.

In 330 A.D., Byzantine Empire caught the ruling power of Cyprus. While one is

traveling across Cyprus, the presence of several Byzantines architectures is not

deniable. These structures are uniquely found in Byzantines Empire. In addition,

there are also some legends referring to that era. For instance, Five Finger Mountains

have a legend which is believed to belong to Byzantines period. It is believed that

while Dighenis , the Byzantine hero, was jumping from Asia Minor to Cyprus to

escape, his fingers caused the surface of these mountains to change.

It is said that Richard the Lionheart successfully captured the island in 1191 when he

was on his way to the Holy Land. Then, firstly he sold it to Knights Templar but they

7

changed their mind and decided to return it. Then, Richard the Lionheart found

another buyer who was a French Noble named Guy de Lusignan. They governed the

island unmercifully for three centuries. Genoese and Marmelukes tried to capture the

island in 1372 and 1426 respectively.

In 1489, the Lusignan family power in the island came to an end when their last king

died and then his wife offered the island for sale in Venice. By the beginning of

Venetians, they again provided a hard situation for residents by forcing them to pay

high level of taxes. Moreover, they transformed the island to make it proper for

military purposes. Venetians were defeated by the Ottomans in 1571. Ottomans took

control of the island and let people relax after hard times of the Venetian period. The

next 500 years were passed under the Ottoman government.

Turkey had appeared as a defeated country in the 1st World War, so Cyprus emerged

as a part of the British colony in 1925. It was not much after the Second World War

when the Greek Cypriots started to express independence from British colonial. They

believed that the island needed to be ruled by Greece. This problem became more

severe day by day and finally in 1957 it came to an end by the intervention of the

United Nations. Consequently, in 1960 this settlement was established by a treaty,

called the Treaty of Zurich, between Britain, Greece and Turkey. Three involved

groups agreed to consider Turkish Cypriot community rights.

The Zurich Treaty did not last long and in 1963 a war started between the

communities. Again, the UN got involved and tried to settle an agreement. They

created a Green Line to force the communities to calm down. But Greek National

8

Guard tried to rule against the Cyprus President and took control of the island.

Hence, as it was mentioned in the Treaty of Zurich, Turkey quickly entered in the

island in order to protect Turkish Cypriots. Finally, in 1983 the Turkish Republic of

Northern Cyprus (TRNC) was founded by Turkish Cypriots. The TRNC is not

recognized internationally and is not a member of the EU while Southern Cyprus is a

full member. Cyprus is still divided into two parts by the Green Line.

2.2 TRNC Economy

Northern Cyprus economy is highly in control of service sector (69% of GDP in

2007). Service sector which is consisted of the public sector, tourism and education

generated approximately USD 400 million in 2011 while industrial sectors only

provided 22% of GDP and agriculture 9%.

Economic development of Northern Cyprus is influenced by the Cyprus problem. By

the beginning of the separation of two parts of the island, the southern part,

recognized internationally, has put some restrictions on the trading system. It has

stated that all airports and ports which are not ruled by the southern government are

legally closed. As the southern part is an EU member, so all European countries have

accepted these embargoes. Therefore, the TRNC is dependent on Turkish economy

to a high extent. As Northern Cyprus is connected to Turkey economically, the

formal currency is Turkish Lira. On the other hand, the southern part is an EU

member and its currency is the Euro. After the opening of the borders and freely

transfer of residents between two parts, Euro has also become a common currency in

TRNC. Although the local currency in North Cyprus is the New Turkish Lira (YTL),

Sterling, US dollar, Euro is also commonly accepted in banks, shops, markets and

9

restaurants. Similarly, major credit cards are recognized by the banking systems

while some retailers may add a commission fee in exchange.

Exports and imports to the northern part are done via Turkey. Although lots of

restrictions are imposed on TRNC economy, it has shown economic development

because of Turkish Lira stability and construction boom in recent years.

2.3 Northern Cyprus Banks

Although Northern Cyprus is dependent on Turkey economically, it has a developed

banking system. Central Bank of Northern Cyprus which is established in 1983 has a

modern structured banking system which is developing continuously due to the

tourism and other economic developments. There are different types of banks

operating in the northern part including Turkish-based, Turkish Cypriot and some

international bank branches. It is worth noting that most of operating banks in the

TRNC are private. In addition, the Central Bank of TRNC acts as the fund provider

to the government and governs monetary, credit and exchange policies.

Since the business community needs are diversifying non-stop, TRNC banks offer

different types of services. Recently, they have developed their services and have

tried to reach an internationally accepted level of performance. They are now

offering a variety of service form insurance and leasing to mutual funds and asset

management services. Similarly, they have developed electronic banking as well as

telephone banking. In addition, most of the branches have English-speaking staff to

satisfy the foreign customers’ demands. ATM machines are available all over the

10

northern part and one can easily manage required transactions via most major credit

cards.

So the banking system is consisted of a mixture of domestic and foreign banks. In

order to have a short list of banks, one can mention the following banks in TRNC:

HSBC, Akdeniz Garanti Bank, Akfinans Bank, As Bank Ltd., Asya Bank, Er Bank,

Everest Bank Ltd., Kibris Faisal Islam Bank, Finba Financial Bank Ltd., Hamza

Bank, KKTC Kalkinma Bank, Kibris Continental Bank Ltd., Kibris Endustri Bank,

Kibris Euro Bank, Kibris Finans Bank, Nicosia Turk Kooperatif Iktisat Bank, Seker

Bank Ltd., Rumeli Bank, Universal Bank, Viya Bank and Yasabank.

As mentioned above, most of banks are effectively managed by Turkey. So, when

applying for a card, depending on the type of card, it can require about one month to

be delivered. Usually, these cards are coming from Turkey. Locals can easily register

by providing their ID card but foreigners need to present their residency status with a

valid passport. Northern Cyprus is among the safest countries in the world and crime

rate is close to zero.

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Chapter 3

3 LITERATURE REVIEW

3.1 Introduction

The objective of this chapter of study is to review the relevant literature on the

concept. Four main sections are present here. First of all, TQM literature is

considered in detail; the second and the third part focus on the literature of the

effective outcomes of TQM factors; and the last but not the least, the fourth part

review the service recovery performance that, in fact, is the behavior consequence of

the instrument constructs.

3.2 TQM

To give a definition of Total Quality Management, one can say TQM is the

satisfaction of everyone who is included in the process of creation and consumption

of the product. This satisfaction is the outcome of implementing hard issues and soft

issues simultaneously. Hard issues can be listed as effective planning, programs,

policies and strategies which are implemented by social shareholders, customers,

staff, owners and suppliers. Similarly, organizations employ soft issues such as

human and other assets (Arasli, 2002).

In recent decades, all organizations have been more focused on Total Quality

Management (TQM). It has an active role in modern management science and affects

12

modern business history profoundly. The majority of organizations that employ

TQM have reported the evident benefits of it in many ways.

TQM is known as a philosophical concept in management science which helps

organizations to control and direct the human and material resources practices in

order to accomplish their objectives in the most effective way (Easton & Jarell,

1998).

The objectives can be listed as follows:

(a) Customer satisfaction.

(b) Improving business condition such as profit, growth, market status and etc.

(c) Providing service to the communities.

The Organization has to consider these objectives in order to be able to exist and

perform in harmonious combination with the requirements of society. The way that

the organization behave to satisfy these requirements can be either legislated or

perceived by the organization and the operation of every organization must be

compatible with them. One of the most important requirements is the ability to meet

the customer needs. It is vital both for separate organizations and within the same

organization. For instance, in case of a banking system, the behavior of a cashier in a

bank can cause a failure for the bank if it is not pleasant and positive. Thus, no matter

what kind of organization is considered, there are a set of quality checkpoints which

are linked together as a series of quality chains. These series can be broken by one

individual or one piece of equipment either internally or externally causing

13

dissatisfaction of the customer. It is worth noting that this failure normally reveals in

the level of interface between the organizations and outside customers, such as the

cashier case in the banking system.

When service organizations are considered, it should be notified that the products are

intangible. So, instead of having a visible or touchable product, the customer will

have an experience of the provided service. Thus, it is not easy to estimate or define

the experience qualitatively. In addition, there are different perceptions of the

experience among the individuals. In the meanwhile, there are some factors which

help to define the services’ quality such as responsiveness to customers, good

manner of employees, punctuality in resolving complaints, and atmosphere.

Moreover, one can add time and consistency to the mentioned list. Therefore,

defining quality in service sector requires full use of abilities and resources (Goetsch

and Davis, 1995).

As mentioned before, total quality management is known as a strategy in order to

improve the performance of the organization. Nowadays, markets are so competitive

so the organization should be modified strategically to compete. The ultimate goal of

each organization is to reach customer satisfaction or even exceed their expectations.

As competition never stops at markets, an organization which is willing to keep

competitive should concentrate on employee participation and implicate continuous

improvement plans (De Menezes, 2012; Molina-Azorin et al., 2009; Kaynak, 2003).

TQM has been applied successfully in service firms as well as industrial and

manufacturing firms (Claver-Cortes et al., 2008; Prajogo, 2005; Brah et al., 2000).

14

The objective of this study is to focus on banks, thus, TQM factors which are

discussed here are chosen consequently. The following factors are considered in this

research: top management leadership, teamwork, empowerment, reward and training.

The fulfillment of all these factors is necessary if an organization is looking for the

successful achievement of total quality management strategy.

In addition, all TQM factors efficiently affect the commitment of employees and the

customer satisfaction if they are applied jointly. Thus, service recovery performance

is highly dependent on the successful accordance between all these factors (Rod and

Ashill, 2010; Babakus et al., 2003; Forrester, 2000; Boshof and Allen, 2000).

3.2.1 Top Management Leadership

Top management is commonly a group of individuals which execute at a senior level

in an organization who manage the daily responsibilities in a corporation. Leadership

is known as one of the most significant factors of the total quality management. One

can list different definitions of leadership such as “leadership is the top

management’s commitment in order to employ continuous improvements to the

organization” (De Menezes, 2012). Similarly, Arasli (2002) notifies that there is not

any succeed in quality management unless top management is committed to

organization mentally and physically. It is not possible to improve junior or low-level

employees’ performance without senior management endeavor.

In the context of total quality management, leadership is characterized as the

provider and driver of the vision (Mittal, 1999). It is observed that TQM based

leadership makes fundamental changes in a corporation and makes it more

15

competitive in comparison with its competitors regarding sales, profits and well-

being of employees. For an organization leadership to be effective, all parts should

be involved in value adding activities. In addition, it is very important that the top

management leadership believes that TQM is the best and only way for a corporation

to succeed in business life (Subburaj, 2005).

3.2.2 Teamwork

Teamwork is the process of accomplishing a task by working jointly with a group

whose members have the same goal. It is commonly of great importance in an

organization where there are different sections which should collaborate together to

perform a task. Similarly, teamwork can be defined as the extent to which an

organization tries to characterize the spirit of working in a unit body while one also

has the power to control his or her own work (Ooi et al., 2007). The practice allows

employees at all levels to be more involved in the job and to work together company-

wide (Noorliza and Zainal, 2000). This systematic training enables employees to be

involved in every single level of work both in individual terms and organization-

wide (Noorliza and Zainal, 2000).

Any organization, whether in manufacturing industries or service industries, needs

corporation in order to survive. Corporation helps the employees to work as a team;

therefore they can communicate properly with each other. No one can deny the

importance of implementing reforms in an organization. As market never stops

moving, organizations need to adapt themselves to these changes. The one which

changes accordingly in a shorter time will be more competitive in new conditions of

the market. Therefore, management should prepare an environment which has the

16

lowest amount of barriers against changing. To sum up, the presence of team

working brings lots of benefits to an organization such as:

Continuous Learning

Flexibility in Working

Better Employee Attitudes

Co-ordination and supports

Building Good Partnership Between Employees and Managers

Creating More Commitment

In conclusion, the importance of teamwork should be considered in the framework

of total quality management.

3.2.3 Empowerment

Management should provide an environment for employees to use their talents and

abilities to improve. This opportunity is defined as empowerment in related literature

(Rod and Ashill, 2010; Chebat and Kollias, 2000). Subburaj (2005) introduces

employees as the powerfulness level of each organization. If they do not involve in

organization improvements, it cannot success. All resources are limited and the only

expandable ones are human resources or employees. Hence, employees are

inseparable part of the total quality management framework.

In TQM philosophy, employees are empowered to report any possible problems in

quality. Historically, employees were afraid of reporting any quality problem in old

management systems because they might be criticized. Moreover, one would pass the

17

responsibility of the defected quality to someone else. Under TQM framework, not

only employees are not criticized, but also they are rewarded for seeking out

problems (Garvin, 1987).

Looking through previous studies, it can be seen that empowered employees are

much more effective to communicate with dissatisfied customers so they can recover

better (Rod and Ashill, 2010; Chebat and Kollias, 2000) .

In service sectors, frontline employees are the ones who are in touch with customers

more so they can communicate with them more efficiently. There are evidences in

literature which show that empowered frontline employees are performing better and

they have a wide outlook of what they are responsible for and how to handle

different situations. Therefore, these kind of employees has a good knowledge of

their own desires and can find themselves in a state of self-confidence and job

satisfaction (Ashill et al., 2008; Ackfeldt and Wong, 2006; Ugboro and Obeng,

2000). Afterwards, the ultimate goal of any organization which is to satisfy its

customers in the most desirable way is easier to achieve with satisfied frontline

employees.

In addition, studies show that empowerment acts in two ways. Firstly, it increases

employees’ job satisfaction (Rod and Ashill, 2010; Ugboro, 2006; Upenieks, 2003;

Laschinger et al, 2001; Eylon and Bamberger, 2000). Secondly, it influences

employees' commitment to the organization (Rod and Ashill, 2010; Kuokkanen et al.,

2003; Laschinger et al., 2001; Liden et al., 2000). So, that is why empowerment

affects service recovery performance significantly.

18

3.2.4 Reward

One can easily find in the literature that there is a direct and significant relationship

between reward giving to employees and increasing the quality of service provided

by them (Rod and Ashill 2010; Kassicieh and Yourstone, 1998). Reward giving here

plays a two-sided role. It both persuades employees to provide higher quality

services and makes them more tolerant to deal with customer complaints (Rod and

Ashill, 2010; Yavas et al., 2003).

The reward is also called a compensation or it can be said that compensation is the

collection of all rewards which may be given to employees in exchange for their

good performance. These rewards can be either directly financial or non-financial

(Mondy, 2007). Therefore, compensation is a strategic key in the hands of

organizations which enables them to guarantee optimal levels of performance in

order to achieve the organization’s ultimate objectives.

In addition, the interfaces of organizations with customers are frontline employees.

Usually, they have the lowest level of salary so the impact of reward on their

performance will be significant (Forrester, 2000). Similarly, (Lawer, 2000) indicates

that this reward can influence their job satisfaction level and their commitment to the

organization.

3.2.5 Training

If an organization is going to provide a high quality service in a consistent manner, it

must consider some factors rather than just choosing the right people and empower

them. So employees’ performances have to be improved by training which enables

19

them to deal with customers pleasantly and correct the problems that arise

unavoidably. Moreover, they should have not only social skills to handle customers’

needs, but also they must be well aware of the characteristics of the product or

service they are offering to the customers.

(Bitner et al., 1990) study shows that Frontline staff is responsible for approximately

43 percent of all unsatisfactory service encounters. It is indicated in (Berry and

Parasuraman, 1991, p. 47) study that only a few numbers of employees are naturally

reacting or replying to events or people, and can manage to satisfy customer needs

when a problem arises. Therefore, there must be an educational system to teach

employees how to react when problems arise. Unluckily the skills which are

necessary to deal with an upset customer are contrary to what common sense would

suggest (Whiteley, 1994, p. 49). When a person receives a complaint, seems as an

attack to him or her. Therefore, training must guarantee that employees control the

situations properly and decrease the probability of conflict.

The importance of training and education of managers, employees and all human

resources is certified by strategy makers (Kassicieh and Yourstone, 1998). TQM

concept enables an organization to be prepared more properly to change for better

performance, so all human resources which are available, including managers and

employees, should communicate with each other in order to gain success in this

particular course of action intended to achieve success. Obviously, some skills are

needed to improve communication through an organization. So trained personnel can

receive willingly new changes and adopt themselves. Since growth is a non-stop

process, there should be a continuous training system. Therefore, training programs

20

investigate different possibilities for employees' potential in order to decrease service

defects which result in customer dissatisfaction (Cardy and Dobbins, 1996). It should

also be notified that this is unreachable without a well-designed training program

which helps employees to employ what they have learned.

Service literature indicates that employees who have not acquired particular skills to

deal with their position, not only are unable to perform their job well, but also fail to

handle customers’ complaints (Rod and Ashill, 2010; Ashill et al., 2008; Lytle and

Timmerman, 2006; Liao and Chuang, 2004; Yavas et al., 2003). No one can deny

that customer is the most valuable asset of any service business, so service providing

organizations, such as banks and financial institutions, should be aware of the

importance of employees’ behavior. It is proved that better quality comes from where

employees are dealing with customers more effectively (Claver-Cortes et al., 2008).

Training is an essential principle in total quality management since it provides a

framework to enhance people performance continuously. Education can empower

employees in order to not only work with hard manner but also work in a clever

manner (Geotsch & Davis, 2010).

3.3 Job Satisfaction

It is assumed that if an employee is happy he or she is more productive. On the other

hand, a productive employee is not necessarily a happy employee. So job

satisfaction is defined as “the pleasant emotional state resulting from the assessment

of somebody’s job as facilitating the accomplishment of one’s job values” (Locke,

1969).

21

Job satisfaction has been the topic of many researchers in many years and the

relationship between job satisfaction and job performance has got significant

importance. Initial studies date back to 1920s were when this relationship was tested

in Hawthorne Studies (Boshoff and Allen 1999). These first studies were followed

by other thousands of articles in more than 90 years and the relationship is still a

question for researchers.

Generally, everybody believes that a satisfied worker is more focused on his or her

performance and performs better. This belief is still held by many practitioners

nowadays but researches show something else. Empirical results state that this

relationship is not very significant and even sometimes it is very weak (Bagozzi,

1980; Locke, 1970). It is interesting to note that many researchers have presented

some evidences that suggest the relationship is significantly in the other direction

(Bagozzi, 1980; Locke, 1970) or in other words, who enjoys his or her job is done

well.

It is stated in the literature that job satisfaction would be more transparent if

employees have the chance to modify their responsibilities and similarly solve the

problems which exist at work. In this case, the intrinsic rewards of work are more in

comparison with the case without these opportunities (De Menezes, 2012). Similarly,

many researches certify that there is a positive significant relationship in service

providing industries between service quality and job satisfaction (Rod and Ashill,

2010). Undoubtedly, customer satisfaction is the ultimate goal of total quality

management. Many studies which are conducted in this field reveal that employees’

job satisfaction, especially in service industries such as banks, is highly in positive

22

relationship with customers’ satisfaction (De Menezes, 2012). Hence, it is usually

suggested that job satisfaction is as a negotiator which acts as a link between

employees’ and customers’ satisfaction.

3.4 Affective Commitment

Literately, affective commitment is the specific degree of which a person is engaged

as a participant in an organization. In other words, affective commitment is the extent

to which a human resource of an organization is associated with the organization

(Ashill et al., 2008). There are also other common definitions available. (Babakus,

2003) define it by a factor which is the feeling of Frontline employees. He suggests

that if one supposes that job satisfaction is the feeling of employees toward their job,

affective commitment can be characterized as the feelings of employees toward the

organization. Therefore, affective commitment is a concept regarding the emotional

connection between the organization and its employees.

It is worth noting that if employees are involved emotionally, there would be a better

performance provided by them. Similarly, these emotional states to help them deal

with customers’ behaviors more efficient (Babakus, 2003). For customers in service

industries also evaluate the quality of a service emotionally, employees’ feelings

have a significant impact on customers ‘satisfaction (Babakus et al., 2003; Menon

and Dube, 2000). These results are also tested empirically and it has been shown in

(Pugh, 2001) study that customers’ evaluation of the service recovery performance is

positively affected by the positive emotional states of the service provider’s

employees.

23

Studies show that if employees are committed to the organization effectively, they

are responsibly active to recover service failure in order to endorse their organization

(Meyer and Herscovitch, 2001). So, service recovery performance is highly

influenced by the level of employees’ emotional commitment to the organization. In

similar studies, it is shown that committed frontline employees are performing very

well and provide a high quality service for the customers (Rod and Ashill, 2010). In

addition, these employees are also active in service recovery more than any other

part of an organization human resource (Rod and Ashill, 2010; Babakus et al., 2003).

3.5 Service Recovery Performance

As mentioned many times in this study, customer satisfaction is very important for

service industries. So, when a service performance fails, frontline service employees

are the first interfaces of an organization who are there to recover the failure. The

way frontline employees deal with service failure recovery by applying their abilities

and actions is called service recovery performance. Their role is very vital to satisfy

customers (Ashill et al., 2008; Babakus et al., 2003). Therefore, frontline employees

are the first steps to bring quality of service in a service industry.

However, frontline employees usually have the lowest level of salary in an

organization. In addition, there are a lot of stress on them during their daily duties.

So, managers who consider total quality management should take care of the

frontline employees very well because they are the key to attain the ultimate goals of

their organizations. Unfortunately, service failures are very common among service

providing organizations and there are only few organizations which seriously take

care of service failures and try to learn from them (Johnston and Mehra, 2002).

24

Therefore, organizations have only one choice which is to solve the problem very

quickly and effectively.

By going through similar studies, one can notify that if the customer is not satisfied

with the service, only a satisfactory recovery by a frontline employee can affect them

positively. So, again, the importance of frontline employees is obvious (Maxham and

Netemeyer, 2002).

Another study by (Karatepe, 2006) confirms that service failures which are followed

by well-done recoveries can have significant positive results in the customer

satisfaction such as repurchasing purposes.

In sum, customers provided with a high quality service are so helpful for an

organization's success and they show complimentary actions. On the other hand,

dissatisfied customers are potential to spread negative information about the

organization and decrease customers’ loyalty to the organization (Rod and Ashill,

2010; Ramsaran-Fowdar, 2008).

25

Chapter 4

4 RESEARCH MODEL AND HYPOTHESIS

4.1 Introduction

In this chapter of the study, a model is introduced and developed. In addition, some

hypotheses are also originated from this model. So, in the first part model is

described in detail and then the hypotheses are discussed one by one.

4.2 Conceptual Model

In this study, a reformulation of attitude theory (Bagozzi, 1992) is employed. In this

theory framework, each person estimates the quality of past, present and future

outcomes individually and this process leads to emotions and afterwards coping

responses. Technically, emotions are also known as affective outcome and coping

responses are known as behaviors. For instance, when an individual feels positively

in an event, his or her emotional responses would be driven positively; therefore, he

or she would behave positively. So, it is obviously understood that the cognitive

evaluation of individuals in events is of great importance because this process results

in the way that they present their affective reactions and shapes the way individuals

behave (Bagozzi, 1992).

As it is mentioned above, this study follows (Bagozzi, 1992) approach. In addition,

TQM factors are introduced as appraisal variables. Hypothetically, these factors are

taken into account as leading factors toward the organization. Here, affective

26

outcomes of TQM are identified as frontline bank employees’ job satisfaction and

affective commitment or in other words the former is how they feel toward their job

and the latter is how they feel toward their organization. Similarly, it is hypothesized

that there is a relationship between job satisfaction and affective commitment.

Figure 4.1: Conceptual Model of Research

Finally, there is a hypothesis which is concerned about how job attitudes and

frontline bank employees’ service recovery performance are related together. This

would determine the way they act or behave toward the customers in order to find a

solution to a service failure. Figure 4.1 depicts a general framework of the research

model.

TQM Factors

Leadership

Teamwork

Empowerment

Reward

Training

Job Satisfaction

Affective

Commitment

Service Recovery

Performance

Control Variables:

Age

Gender

Education

Tenure

27

4.3 Hypothesis

It can be inferred from figure 4.1 that total quality management factors which are

listed in this model would have a positive impact on the frontline employees in order

to reach a state of satisfaction in their job. In addition, it is supposed that they could

also affect the frontline employees to be committed to the organization more

effectively. Therefore, according to the relationship between TQM factors and job

satisfaction and affective commitment, the first groups of hypotheses are proposed as

follows:

: 1- There is no positive association between leadership and bank employees’ job

satisfaction.

: 2- There is no positive association between teamwork and bank employees’ job

satisfaction.

: 3- There is no positive association between empowerment and bank employees’

job satisfaction.

: 4- There is no positive association between reward and bank employees’ job

satisfaction.

: 5- There is no positive association between training and bank employees’ job

satisfaction.

28

: 6- There is no positive association between leadership and bank employees’

affective commitment.

: 7- There is no positive association between teamwork and bank employees’


: 8- There is no positive association between empowerment and bank employees’


: 9- There is no positive association between reward and bank employees’


: 10- There is no positive association between training and bank employees’


It is worth noting that one should consider the relationship between job satisfaction

and affective commitment because affective commitment is not constant over time

and develops as time passes. Similarly, in order to reach a proper level of affective

commitment, the importance of job satisfaction of employees is undeniable (Ashill et

al., 2008). As a result, it is suggested that employees supply affective commitment

when they have experienced job satisfactions (Ashill et al., 2008). Hence, the next

step is to propose mutual relationships between job satisfaction and affective

commitment:

29

: 11- There is no positive relationship between bank employees’ job satisfaction

and their affective commitment to the organization.

According to the reviewed literature, job satisfaction and affective commitment have

a combined impact on the service recovery performance. It is suggested in the

literature of the service industry that the frontline employees’ job satisfaction and

customers’ satisfaction from the service provided are related positively and

significantly (Yoon et al., 2001). Similarly, it has been shown in the literature that

when the employees are more committed to their organization, they do their tasks

more efficiently and in case of failure they can perform more successfully to attract

customers’ satisfaction (Rod and Ashill, 2010). According to this fact, affective

commitment is known as a vital factor which has a positive significant impact on

service recovery performance (Rod and Ashill, 2010). In addition, TQM also plays

an important role in improving the quality of service recovery performance.

Therefore, the last group of hypothesis is proposed about the individual correlations

between job satisfaction, affective commitment and TQM with service recovery

performance.

: 12- There is no positive relationship between bank employees’ job satisfaction

and service recovery performance.

: 13- There is no positive relationship between bank employees’ affective

commitment and service recovery performance.

30

: 14- There is no positive direct relationship between TQM and bank employees’

service recovery performance.

In this chapter, we proposed the conceptual model of study and we proposed fourteen

hypotheses according to the model. In the coming chapter, correlation analysis

results reveal whether the correlation coefficient is statistically significant or not;

and, then they also determine the degree of correlation between study factors.

31

Chapter 5

5 DATA AND RESEARCH METHODOLOGY

5.1 Sample and Study Setting

This study is going to evaluate the role of total quality management in assessing the

impact of job satisfaction and affective commitment of employees on the service

recovery performance in commercial banks of Northern Cyprus. Therefore, the best

sample which can represent the banking sector in Northern Cyprus was chosen

among operating banks. Data is collected from the bank employees and managers in

the Northern Cyprus banking sector including IŞ Bank, Koop Bank, Garanti Bank,

TEB, Halk Bank and ING Bank from their branches in Famagusta, Kyrenia and

Lefkosa. In addition, a random sampling method is properly applied in order to

distribute questionnaires.

Unfortunately, many questionnaires were not answered by the respondents. Only 150

out of 400 questionnaires were completed, in other words less than 50% of

respondents completed the questionnaires. Therefore, these 150 fully completed

questionnaires were prepared to be considered in the analysis. Among all the reasons

which were mentioned by the participants for not completing the questionnaires, the

managers’ command was substantial. So, most of them were not allowed to complete

the questionnaires.

32

5.2 Questionnaire Measures and Structure

The questionnaire consisted of three parts: Firstly, the respondents would respond the

factors which are going to be analyzed in this study. Secondly, personal information

questions were asked of respondents including age, gender, education level and

tenure. In the last section, they were asked about their position in the institution and

some information about the institution.

This study is organized in a form which is a self-report survey; therefore, it is

potentially exposed to method variance. In addition, because there is a high

possibility of getting into the trouble with single-source method bias, the

questionnaire was carefully designed to have three parts separating dependent and

independent variables (Podsakoff et al., 2003).

Subsequently, the factors which are selected for this study are categorized in

different sections and questions are designed for each category. The respondents

answer questions by scale numbers in each category. Categories are asking questions

about top management leadership, teamwork, empowerment, reward, training,

affective commitment, satisfaction and service recovery performance. In order to

finalize the questionnaire framework, the scales were introduced similar to what is

commonly used in the literature. Hence, accordingly a five-time scale was employed

to evaluate a different factor. So, all factors would be evaluated on a five-point scale

varying from ‘Strongly Disagree = 1’ to ‘Strongly Agree = 5’. In other words, the

respondents are asked to answer the questions based on the scaling system provided

beside each question. The answers vary from 1 to 5. A sample of the questionnaire

used in this study can be found in the appendix.

33

As it has been mentioned before, this study has used different types of control

variables in order to find a possible connection between hypothesis. Accordingly,

participants gender is measured via a binary variable defined either a male or female;

age is controlled by a six-point scale consisting of 17-20, 21-24, 25-28, 29-35, 36-50

and 51+.

Similarly, education and tenure are scaled in 4-point scaling basis where the higher

scale number shows more experienced combined with higher education level.

Organizational tenure scale points are as 1-4 years, 4-8 years, 8-12 years and 12+

years. Moreover, institutional variables are also taken into account to clarify the

respondents’ background.

5.3 Reliability and Factor Analyses

Reliability using Cronbach alpha and factor analyses have been conducted in order to

test for the suitability of instrument and sample (Arasli et al., 2005).

As also suggested by (Arasli et al. 2005), according to the Catell’s (1966) study

criterion, factor loadings that are equal to or greater than 0.50 should be retained;

otherwise, they are omitted from further analyses. A factor analysis was conducted

for every question in the instrument using varimax rotation. As can be seen from

Table 5.1, factor loading of only one question (which is question 5 in Recovery

dimension) is less than 0.50; therefore, this question is dropped from further analyses

(Hair et al., 1998). Finally, reliability analysis has been also used in this study in

order to see the overall reliability score of our instrument. Cronbach’s alpha

coefficient for the whole instrument is 0.94 as seen in Table 5.1. Literature studies

34

suggest that a reliability coefficient above 0.70 is considered sufficient for

exploratory studies (Nunnally, 1967).

Table 5.1: Reliability and Factor Analyses

Reliability Statistics

Cronbach's Alpha N of Items

.940 43

Factor Loadings

Initial Extraction

Lead1 1.000 .690

Lead2 1.000 .725

Lead3 1.000 .763

Lead4 1.000 .814

Lead5 1.000 .643

Team1 1.000 .688

Team2 1.000 .760

Team3 1.000 .753

Team4 1.000 .673

Team5 1.000 .621

Empower1 1.000 .788

Empower2 1.000 .581

Empower3 1.000 .804

Empower4 1.000 .799

Empower5 1.000 .745

Reward1 1.000 .611

Reward2 1.000 .673

Reward3 1.000 .735

Reward4 1.000 .698

Reward5 1.000 .700

Training1 1.000 .667





35

Table 5.1: Reliability and Factor Analyses (Continued)

Commitment1 1.000 .633





Satisfaction1 1.000 .841








Recovery1 1.000 .746





Note: Extraction Method: Principal Component Analysis.

5.4 Hypothesis Testing and Correlation Analysis

In order to test the significant difference between the selected profiles, a hypothesis

testing should be employed in this study. One of the best options to conduct this test

is an Analysis of Variance (ANOVA). SPSS software can easily provide the

ANOVA test.

Afterwards, in order to certify the validity of the proposed model, correlation and

path analysis will be done in this study. Statistically, correlation analysis is a vital

concept because it represents the level of relationship between independent variables

in a model and also it determines the direction of this relationship. Moreover, the

outcomes of this analysis are reported in percentage terms. For instance, a negative

coefficient in correlation analysis represents an indirect relationship between two

36

independent variables while a positive coefficient stands for a direct relationship

between two independent variables.

The final step will be path analysis where the degree and direction of correlation are

investigated together in order to evaluate the parameters in the conceptual proposed

model. Path analysis can be categorized as a regression model.

37

Chapter 6

6 EMPIRICAL RESULTS

6.1 Descriptive Statistical Analysis

As mentioned before, TQM indicators are hypothesized to be leadership, teamwork,

empowerment, reward and training. Then, according to the conceptual model of this

study, we tried to investigate whether there is a correlation between these indicators

and job satisfaction as well as employees’ commitment to the organization. The

empirical results indicate statistically that these factors can be considered as

indicators which are significantly affected TQM procedures.

6.2 Frequencies

In order to provide data for this study, four hundred questionnaires were distributed

among Northern Cyprus banking system employees, managers and chef. It is worth

noting again that unfortunately only 150 questionnaires were completed by

participants. According to the gathered data which is shown in table 5.1, male

respondents (59.3%) were more than female respondents (40.7%). In addition, a

majority of them were between 36 to 50 years old (36%). In terms of educational

training, about half of them (48%) were holding two-year vocational training degrees

while the other half (48%) had faculty training of four years.

38

Table 6.1: Frequency Table

Age

Frequency Percent

Valid

Percent Cumulative Percent

Valid

17-20 10 6.7 6.7 6.7

21-24 22 14.7 14.7 21.3

25-28 23 15.3 15.3 36.7

29-35 27 18.0 18.0 54.7

36-50 54 36.0 36.0 90.7

51+ 14 9.3 9.3 100.0

Total 150 100.0 100.0

Gender

Frequency Percent

Valid


Valid

Male 89 59.3 59.3 59.3

Female 61 40.7 40.7 100.0

Total 150 100.0 100.0

Education

Frequency Percent

Valid


Valid

Vocational

School/Two

Years

72 48.0 48.0 48.0

Faculty/Four

Years 72 48.0 48.0 96.0

Master 6 4.0 4.0 100.0

Total 150 100.0 100.0

Position

Frequency Percent

Valid


Valid

Manager 41 27.3 27.3 27.3

Chef 24 16.0 16.0 43.3

Employee 85 56.7 56.7 100.0

Total 150 100.0 100.0

Additionally, only 6 individuals (4%) in the sample had master degree. The last but

not the least, the questionnaires were mostly filled by frontline employees (56.7%)

39

and the rest of the questionnaires were completed by managers (27.3%) and chiefs

(16%).

All questionnaires data were analyzed and summarized in the following table. Table

6.2 represents a common view of the questionnaires and some descriptive statistics

such as minimum and maximum scores in each section mean score of each section

and finally standard deviation of scores in each section.

Table 6.2: Descriptive Statistics of Completed Questionnaires

N Minimum Maximum Mean

Std.

Deviation

Lead Total 150 1 5.00 4.3667 0.6848

Team Total 150 1 5.00 4.2987 0.55696

Empower Total 150 1 5.00 4.2133 0.75429

Reward Total 150 1 5.00 4.068 0.82895

Training Total 150 1 5.00 4.1773 0.83819

Commitment Total 150 1 5.00 4.3173 0.69637

Satisfaction Total 150 1 5.00 4.1275 0.67981

Recovery Total 150 1 5.00 4.0427 0.5721

TQM 150 1 5.00 4.2704 0.48771

Valid N (List-

wise)

150

5.00

As it is obvious in the table, average score of each variable is above four with

standard deviations less than one.

40

6.3 Correlation Analysis

After reviewing the questionnaires, the next step is to check the level of correlation

between different variables. Firstly, the degree of correlation between TQM, the job

satisfaction of employees, employees’ affective commitment to their organizations

and service recovery performance is investigated. Secondly, the degree of correlation

among TQM indicators is tested. In other words, we have gone through the degree of

correlation between one indicator and others one by one. Finally, we have also

analyzed the degree of correlation between TQM indicators and both TQM and

service recovery performance.

6.3.1 Correlation Analysis: TQM, Job Satisfaction, Affective

Commitment and Service Recovery Performance

In the first step of correlation analysis, TQM, job satisfaction, affective commitment

and service recovery performance are introduced as inputs. The results in the table

6.3 show that all dimensions are in positive correlation. It is also depicted in the table

that the highest level of correlation exists between affective commitment and job

satisfaction (0.688). On the other hand, the lowest level of correlation is between job

satisfaction of employees and service recovery performance (0.141).

Table 6.3: TQM, Job Satisfaction, Affective Commitment and Service Recovery Correlations

TQM

Job Affective Service

Satisfaction Commitment Recovery

TQM

Person Correlation 1 0.675* 0.683* 0.237*

Sigh. (2-tailed)

0 0 0.004

N 150 150 150 150

Job

Satisfaction

Person Correlation 0.675* 1 0.688* 0.141***

Sigh. (2-tailed) 0

0 0.085

N 150 150 150 150

Affective

commitment

Person Correlation 0.683* 0.688* 1 0.15***

Sigh. (2-tailed) 0 0

0.067

N 150 150 150 150

Service

Recovery

Person Correlation 0.237* 0.141*** 0.15*** 1

Sigh. (2-tailed) 0.004 0.085 0.067 0

N 150 150 150 150

*. Correlation is significant at the 0.01 level (2-tailed)

**. Correlation is significant at the 0.05 level (2-tailed)

***. Correlation is significant at the 0.10 level (2-tailed)

42

6.3.2 Correlation Analysis: TQM Indicators

This part of correlation analysis is concerned about the possible presence of

relationship among TQM indicators. Hence, the correlation of each indicator with

others is investigated.

6.3.2.1 Leadership and TQM Indicators

This part of analysis has gone through the analysis of leadership relationship with

other TQM indicators. The results show that leadership is positively related to other

indicators. The highest level of correlation is available with teamwork (0.565). In

other words, leadership is highly related with teamwork which makes sense. In

addition, the lowest level of correlation is present with reward (0.376).

Table 6.4: Leadership and TQM Indicators Correlations

Leadership

Leadership

Pearson

correlation 1

sig.(2-tailed )

N 150

Teamwork

Pearson

correlation 0.565*

sig.(2-tailed ) 0

N 150

Empowerment

Pearson

correlation 0.390*

sig.(2-tailed ) 0

N 150

Reward

Pearson

correlation 0.376*

sig.(2-tailed ) 0

N 150

Training

Pearson

correlation 0.523*

sig.(2-tailed ) 0

N 150


43

6.3.2.2 Empowerment and TQM Indicators

The correlation analysis results (Table 6.5) show that empowerment is positively

related to other indicators. The highest level of this positive correlation is available

with reward (0.454) while the lowest level is with teamwork (0.318). Although

teamwork has the lowest correlation level, it is statistically significant at the 0.01

level.

Table 6.5: Empowerment and TQM Indicators Correlations

Empowerment

Leadership

Pearson

correlation 0.390*

sig.(2-tailed ) 0

N 150

Teamwork

Pearson

correlation 0.318*

sig.(2-tailed ) 0

N 150

Empowerment

Pearson

correlation 1

sig.(2-tailed )

N 150

Reward

Pearson

correlation 0.454*

sig.(2-tailed ) 0

N 150

Training

Pearson

correlation 0.417*

sig.(2-tailed ) 0

N 150


6.3.2.3 Reward and TQM Indicators

It is shown in table 6.6 that there are positive correlations between reward and other

TQM indicators. In addition, the test results confirm that correlations are statistically

44

significant. Additionally, the highest level of correlation belongs to training (0.59)

while leadership has the lowest correlation coefficient (0.376).

Table 6.6: Reward and TQM Indicators Correlations

Reward

Leadership

Pearson

correlation 0.376*

sig.(2-tailed ) 0.00

N 150

Teamwork

Pearson

correlation 0.461*


N 150

Empowerment

Pearson

correlation 0.454*


N 150

Reward

Pearson

correlation 1

sig.(2-tailed ) 0

N 150

Training

Pearson

correlation 0.59*


N 150


6.3.2.4 Teamwork and TQM Indicators

Teamwork is known as another main indicator of TQM factors. So, any correlation

between teamwork and other indicators should be investigated. As the results in table

6.7 shows, teamwork is positively correlated with other indicators. In addition,

correlation analysis results represent a leadership correlation level as the highest

(0.565) while empowerment is believed to have the lowest (0.318).

45

Table 6.7: Teamwork and TQM Indicators Correlations

Teamwork

Leadership

Pearson

correlation 0.565*

Sigh. (2-tailed ) 0.00

N 150

Teamwork

Pearson

correlation 1

Sigh. (2-tailed )

N 150

Empowerment

Pearson

correlation 0.318*


N 150

Reward

Pearson

correlation 0.461*


N 150

Training

Pearson

correlation 0.518*


N 150


6.3.2.5 Training and TQM Indicators

The last indicator which is tested in order to determine the correlation coefficient is

training. As expected, training also has positive correlation with other TQM

indicators (Table 6.8). The highest correlation coefficient reveals in reward (0.590)

and the lowest correlation coefficient is available in accordance with empowerment

(0.518).

46

Table 6.8: Training and TQM Indicators Correlations

6.3.3 Correlation Analysis: TQM indicators, TQM and Service

Recovery

In this section of correlation analysis, two parts are introduced. The first part

represents the correlation analysis between TQM indicators and TQM; the second

part depicts the correlation analysis between TQM indicators and service recovery

aspects.

6.3.3.1 TQM Indicators and TQM

As it is shown in table 6.9, there are positive correlations between TQM indicators

and TQM. In addition, it is also depicted that these correlation coefficients are

Training

Leadership

Pearson

correlation 0.564*


N 150

Teamwork

Pearson

correlation 0.518*


N 150

Empowerment

Pearson

correlation 0.417*


N 150

Reward

Pearson

correlation 0.590*


N 150

Training

Pearson

correlation 1


N 150


47

statistically significant. It is also important to notify that the highest correlation

coefficient is between Training and TQM (0.821). On the other hand, the lowest

coefficient revealed in the results is the correlation between Empowerment and TQM

(0.664).

Table 6.9: TQM Indicators and TQM Correlations

TQM

Leadership

Pearson

correlation 0.745*


N 150

Teamwork

Pearson

correlation 0.727*


N 150

Empowerment

Pearson

correlation 0.664*


N 150

Reward

Pearson

correlation 0.766*


N 150

Training

Pearson

correlation 0.821*


N 150


6.3.3.2 TQM Indicators and Service Recovery

Technically, the correlations between TQM indicators and service recovery are of

great importance. Therefore, the correlation analysis between these indicators and

Service Recovery is represented in table 6.10. According to the results, TQM

indicators and service recovery are correlated positively. Moreover, the highest

48

correlation is between reward and service recovery (0.207) which is statistically

significant at 0.05 levels. On the other hand, the lowest correlation which is

statistically significant is between empowerment and service recovery (0.153).

Table 6.10: TQM Indicators and Service Recovery

Service recovery

Leadership

Pearson

correlation 0.201*


N 150

Teamwork

Pearson

correlation 0.106


N 150

Empowerment

Pearson

correlation 0.153***


N 150

Reward

Pearson

correlation 0.207**


N 150

Training

Pearson

correlation 0.105


N 150


**. Correlation is significant at the 0.05 level (2-tailed)

***. Correlation is significant at the 0.10 level (2-tailed)

To sum up, the correlation analysis results show that there are statistically significant

and positive correlations between the variables which are considered in this study. In

the next chapter, conclusions are discussed and policy implications are suggested

based on the empirical results.

49

Chapter 7

7 CONCLUSIONS AND POLICY IMPLICATIONS

7.1 Conclusions

As discussed in the introduction chapter, this study was going to investigate whether

TQM plays an important role in the evaluation of the job satisfaction and employees'

commitment on service recovery performance in commercial banks of Northern

Cyprus. Moreover, we mentioned that the special concern of this study, which makes

it different in comparison with the related literature, is the investigation of the

relationship of job satisfaction and employees' commitment with service recovery

performance. It is also important to remember the importance of this study. As TQM

is recognized as a proper approach to optimize the management system, the

investigation of these correlations helps the management team to improve the

performance of their human resources. Therefore, the more the management team is

aware of this relationship, the better they can survive in the competitive service

industries, specifically commercial banking.

In order to provide the required data, the sample was selected from commercial

banks operating in Northern Cyprus. To the extent of our knowledge, this hypothesis

have never been studied before, especially the relationship of job satisfaction and

employees' commitment with service recovery performance.

50

Afterwards, fourteen hypotheses were introduced based on the possibility of the

relationship between the study factors. Subsequently, correlation analysis was

conducted to test the proposed hypothesis. Correlation analysis was categorized into

three sections. Firstly, the TQM, Job Satisfaction, Affective Commitment and

Service Recovery correlations were confirmed to be positive and statistically

significant. The results showed that Job Satisfaction and Affective Commitment are

correlated more than other factors. In other word, the satisfied staffs are more

effectively committed to their bank. In addition, when there is an event of service

recovery performance, job satisfaction is shown to have the least impact according

to the results.

Secondly, the results certified that all TQM indicators are positively correlated

together. So, it can be interpreted that Northern Cyprus commercial banking system

should pay sufficient attention to all TQM factors because they are positively

correlated.

The last but not the least category of correlation analysis takes the relationship

between TQM indicators and Service Recovery Performance into the account. It can

be concluded that TQM factors (top management leadership, teamwork,

empowerment, reward and training) affect service recovery performance in Northern

Cyprus commercial banking system. Therefore, in order to improve the staff's

responsiveness in the event of customers' complaints, the managers should carefully

control TQM factors.

51

7.2 Policy Implications

The outcomes of this study can be considered by top management and decision

makers in Northern Cyprus commercial banking system. As it is discussed in detail

in the previous sections, TQM indicators are effectively determining the level of job

satisfaction and commitment of the staffs to the organization. So, if managers apply

proper TQM policies, they can guarantee the customers' satisfaction because the

organization is supported by the satisfied and committed staff. Consequently,

customers' satisfaction is the ultimate goal of any organization and the managers are

expected to do their best to reach the maximum level of customer satisfaction.

As the events of defaults are not predictable, the managers of Northern Cyprus

commercial banking system should prepare their staffs to control these events. When

a customer faces a failure, the most important thing is how to satisfy him or her.

Therefore, the frontline staffs in the banking system should be well prepared to

handle these situations. Our results indicate that reward has a higher correlation with

service recovery performance. Hence, if managers encourage their staffs by granting

rewards according to their performance, they can improve the level of service

recovery in their organization. Similarly, they can monitor the performance of their

frontline staff regarding to their attitudes toward the customers and encourage them

by promoting their position.

Nowadays, technology is progressing with an increasing rate. Commercial banking is

also affected by this trend. Therefore, training is an important factor which should be

in the priorities of the management team. As our result show, training is affecting the

quality management higher than other factors. So, the top decision makers in

52

Northern Cyprus commercial banks should provide training programs in order to

keep their staffs up-to-dated.

To be efficient, organization should try to employ all of their capacity. In other

words, teamwork has an undeniable role in the banking industry. Therefore,

managers should assign responsibilities to their staff in a way to enhance the degree

of teamwork. It is also confirmed in our results that teamwork has the same level of

importance in the Northern Cyprus banking system. In addition, it is indicated that

teamwork is highly related to leadership. So, managers as the leaders of

organizations should plan strategically in order to bring the teamwork attitudes in

their organizations.

53

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61

APPENDIX

62

A: Questionnaire

Thank you for participating in this study. The survey should take about 15

minutes to complete. Your responses are kept confidential.

Your answers must fit in the scale of 1(strongly disagree) to 5(strongly agree):

Top Management Leadership:

Top management actively participates in quality management and

improvement process. 1 2 3 4 5

Top management strongly encourages employee involvement in

quality management and improvement activities. 1 2 3 4 5

Top management arranges adequate resources for employee

education and training. 1 2 3 4 5

Top management discusses many quality-related issues in top

management meetings. 1 2 3 4 5

Top management pursues long-term business success. 1 2 3 4 5

Teamwork:

Everyone in my department contributes to a team effort in serving

customers. 1 2 3 4 5

I feel that I am part of a team in my department. 1 2 3 4 5

My fellow employees and I co-operate more often than we compete. 1 2 3 4 5

The activities of the bank require team-based works rather than

personal achievements. 1 2 3 4 5

The bank management is trying to transfer some authority to their

workers. 1 2 3 4 5

Empowerment:

I have the authority to correct customer problems when they occur. 1 2 3 4 5

I am encouraged to handle customer problems by myself. 1 2 3 4 5

I do not have to get management's approval before I handle customer

problems. 1 2 3 4 5

I am allowed to do almost anything to solve customer problems. 1 2 3 4 5

I have control over how I solve customer problems. 1 2 3 4 5

63

Reward:

If I improve the level of service I offer customers, I will be rewarded. 1 2 3 4 5

The rewards I receive are based on customer evaluations of service. 1 2 3 4 5

Employees in this bank are rewarded for serving customers well. 1 2 3 4 5

Employees of this bank are rewarded for dealing effectively with

customer problems. 1 2 3 4 5

I am rewarded for satisfying complaining customers. 1 2 3 4 5

Training:

Employees in this bank receive continued training to provide good

service 1 2 3 4 5

Employees in this bank receive extensive customer service training

before they come into contact with customers 1 2 3 4 5

Employees of this bank receive training on how to serve customers

better 1 2 3 4 5

Employees of this bank are trained to deal with customer complaints 1 2 3 4 5

Employees in this hotel receive training on how to deal with

complaining customers 1 2 3 4 5

Affective Commitment:

My values and those of the banks' are similar. 1 2 3 4 5

I really care about the future of this bank. 1 2 3 4 5

I am proud to tell others that I work for this bank. 1 2 3 4 5

I am willing to put in a great deal of effort beyond that normally

expected in order to help the bank to be successful. 1 2 3 4 5

For me, this is the best of all possible organizations for which to

work. 1 2 3 4 5

Satisfaction:

I am satisfied with my overall job. 1 2 3 4 5

I am satisfied with my fellow workers. 1 2 3 4 5

I am satisfied with my supervisor(s). 1 2 3 4 5

64

I am satisfied with this bank’s policies. 1 2 3 4 5

I am satisfied with the support provided by this bank. 1 2 3 4 5

I am satisfied with my salary. 1 2 3 4 5

I am satisfied with the opportunities for advancement with this bank. 1 2 3 4 5

I am satisfied with this bank’s customers. 1 2 3 4 5

I often think about leaving this bank. 1 2 3 4 5

Serivce Recovery Performance:

I don't mind dealing with complaining customers. 1 2 3 4 5

No customer I deal with leaves with problems unresolved. 1 2 3 4 5

Satisfying complaining customers is a great thrill to me. 1 2 3 4 5

Complaining customers I have dealt with in the past are among

today's most loyal customers. 1 2 3 4 5

Personal Information:

Age: 17-20

21-24

25-28

29-35

36-50

51+

Gender: Female

Male

Education: Vocational School/Two Years

65

Faculty/Four Years

Master

PhD

Organizational Tenure: 1-4 years

4-8 years

8-12 years

12+ years

Institutional Information:

Number of Stars: Three

Four

Five

Department: ……………………………

Position: Manager

Chief

Employee

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